Potential B&O Tax to Quintuple for Washington Tour Operators

Washington House Democrats have released their plan for funding the “Education Workforce Recruitment & Retention Funding Package,” and it eliminates the preferential Business & Occupation tax rate for travel agents and tour operators.

Click here for the Washington House Democrat’s release on what HB 2996 will contain.

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The current B&O tax rate for Travel Agents & Tour Operators is .00275%. If repealed, the rate applied to Travel Agent and Tour Operator revenue will likely be categorized at the Retailing Rate of .00471% or the Services & Other Activities Rate of .015%. Thus, the tax rate, and tax liability, will roughly double if the Retailing rate is applied; or if the Services and Other Activities rate applies, the tax rate, and tax liability will increase by more than five times the status quo. Yet, the elimination of the preferential rate would account only for approximately 5% (five percent) of the funding package.

What can you do? Contact your state legislators today because this year’s legislative session is moving very, very quickly. Tell them what this will mean to you, your business, and your family. Talk about your friends’ in the business who may not have noticed this proposal (feel free to forward this notice).

Find your state legislators’ names and contact information.

The statement explaining why the Travel Agent and Tour Operator B&O tax rate is on the table states, “This preferential B&O tax rate was created in 1975 when travel agents operated under a very different business model. The travel industry has changed dramatically in recent years and now online and out-of-state businesses are the main beneficiaries. No other state offers this tax break.”

While (apparently) no other state offers this tax break, Washington state is one of two or three states, if not the only state, in which there is no state funding for promoting tourism.

At the same time, nationwide, 84% of travel companies consider themselves small businesses, and travel is the 7th largest industry employer in the country. (U.S. Travel Association.) According to the Washington Tourism Alliance, a privately funded association, travel generated employment exceeds 160,000 jobs in Washington.

If you are concerned about this change, please contact your legislators immediately to explain the impact on your business.

See previous discussion on proposed changes to B&O tax for tour operators and travel agents.

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